Opposition politician Goh Meng Seng has taken to Facebook to ponder whether the “unreliable investment returns” from sovereign wealth funds Temasek Holdings and GIC are linked to the impending tax hike that is expected to hit Singapore soon.
Prime Minister Lee Hsien Loong confirmed on 19 Nov that higher taxes are inevitable and stressed that it is a matter of when and not whether taxes will be hiked.
Interestingly, when allegations that the government would raise taxes erupted in 2015, during that year’s General Election campaign period, the head of government was quick to rubbish such claims. He asserted:
“What will make you need to raise GST? Profligate spending and irresponsible, unsustainable plans. That is what will hurt and require you to raise taxes and GST.”
Taking to Facebook today, Goh postulated that the tax hike could be implemented to counter the returns from state investment funds or to make up for multi-national companies moving their base of operations back to the United States.
The chief of the People’s Power Party, Goh claimed:
“The impending raise of Tax by PAP government has ABSOLUTELY nothing to do with higher amount of money they are giving out as social welfare to the poor or such. It has nothing to do with money well spent on Singaporeans but basically due to a bloated administration which chose to pay itself and its cronies hefty income and profits via various government contracts (remember that over $400K of “Consultancy fees” for a small rubbish dump?) but face with two diminishing income with great uncertainties.”
Read his full post here:
Thought of the Day – Reasons for Raising TaxAt this moment, there are only two main reasons I can see for PAP's…
In case you cannot read the above:
Thought of the Day – Reasons for Raising Tax
At this moment, there are only two main reasons I can see for PAP’s intention to raise tax.
One, the unreliable investment returns from Temasek Holdings and GIC due to their past risky bets made in 2008 financial crisis. At most half of the investment returns from our SWF could be put into PAP government’s annual budget.
However, from various “External” news sources, it seems that the types of huge risky portfolios from TH and GIC are not performing well. Some have suffered extraordinary losses. Sovereign Wealth Funds are not supposed to be dominated by high risk portfolios. But due to the misjudgment and mismanagement of investments since 2000, the portfolio of our SWF, especially TH, has become highly volatile. We could hear about tens of billions losses in one year and the with tens of billions of gains the next. This is totally undesirable and it is not what SWF should end up with.
When the investment return from our SWF becomes unstable with great uncertainties, there is no way to have good budget planning. Thus, the only way is to “play on the safe side” by raising taxes to deal with the uncertainties. By PAP’s Kiasu Kiasi logic, it is better to have more budget surpluses when investment returns from our SWF soars during good times, instead of great “Malu” deficits when our SWF failed to give substantial returns.
The second reason is due to the economic structure which PAP has built upon for the past decades. They have relied heavily on providing great tax incentives to MNCs to make Singapore their Regional or even Global HQs. Corporate Tax rates for these MNCs could be as low as 5%, as long as they registered their global or regional profits here in Singapore.
Thus, PAP made Singapore the “tax havens” for MNCs, enjoying CHEAP EASY tax revenues from them even though these are at a low rate.
However, Trump’s Presidency has started to change the game rules. Broadcom has decided to shit their “HQ status” back to US. What does that mean? It means that although there might not be any “physical shift” of operations from Singapore to US, but through complex transfer pricing, majority of its Global’s profits will be shifted and registered in US instead of Singapore.
It means that PAP government will lose the 5% tax on the huge profits Broadcom and those MNCs making such similar moves.
The impending raise of Tax by PAP government has ABSOLUTELY nothing to do with higher amount of money they are giving out as social welfare to the poor or such. It has nothing to do with money well spent on Singaporeans but basically due to a bloated administration which chose to pay itself and its cronies hefty income and profits via various government contracts (remember that over $400K of “Consultancy fees” for a small rubbish dump?) but face with two diminishing income with great uncertainties.
Get the latest news, opinions and commentaries. Available on Android